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Is investing in residential land a good idea?

Hi, i'm new to Zillo and new to the STL area.  Looking to invest in property here, but trying to keep my options open.  There seem to be lots of foreclosed homes in STL, not to mention the entire nation.  Although many of these homes are going for dirt cheap prices, many of these foreclosed/auctioned homes seem to be extremely old and need a ton of rehab work to make them functional again.  I'm not looking to flip houses anytime soon.  Merely trying to make sound investments for the future and sell when the market makes a comeback (whenever that may be). 

However, i am also considering pure land in lieu of actual homes.  I am doing my research on the areas that have had the most development, fastest growing cities, and cities that have the fastest increase in home prices here in Missouri, and considering buying residential land and "sitting on it" til the time is right to sell. 

Would buying land (already zoned out for residential home building) in an up and coming area/town be a sound investment, or old run down property in need of rehab that can be picked up for dirt cheap?  Both seem like a considerable choice, however, i'm leaning towards land that i believe will increase in value in developing and upcoming towns. 

Thoughts??
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August 24 2011 - Saint Louis
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Answers (8)

If you are asking this question, then NO, its not for you. Buy a fixer-upper if you have the urge to build a house....
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September 13 2011
We work with a number of investors and the new construction is starting to "wake up" - especially in the the in-fill development.  There are a number of the larger builders who are still looking to liquidate some of the lots they've held on to -

I do see it as a LONG term hold ---
Good luck!
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September 13 2011
Profile picture for STLforNow
Excellent!  Thank you much for all that applied.  Ya, i figured that rehab'ing a property for monthly rental income would be the better route to go.  However, being new to STL, i'm still trying to get a lay of the land here and in the process of figuring out the best areas to invest in.  Again, i'm trying not to judge a book by it's cover, which as really been the hard part for me so far. 

Although i have to admit, putting in the time and effort in doing the research has been half the fun.  I almost can't peel myself away from the computer at times trying to take in all this public knowledge!  Call it information "overload" or being a prepared investor, either way, i'm thoroughly enjoying learning and preparing for future investments here in a new town. 
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August 24 2011
Investments of any type at this time may be seen as risky. But, we need to realize that it's in times like these that fortunes are made. There is only so much land, and when an area feels the pressure from residential/commercial growth, prices go up. I think that investing in any real estate at this time will take awhile to see your return (ROI). There are areas where one can do some research to take the guessing to a lower level, and eventually, the market will return. Real estate has notoriously been good for long time investors.
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August 24 2011
Profile picture for SteadyState
The question is too broad but here is some wisdom from experience.

Land can be a profitable investment but this requires careful planning and is best done when you know the area is targeted for commercial/residential building activities in the very  near future.

The best opportunity to buy land is to piggy-back on areas where a local senator/congress-person and or some other influential or deep pocketed individual has made recent purchases. In general they will push so that their property increases in value - so will yours.

There are other "project based land purchases" but these require extreme skills and the ability to move quickly. For example, buy on announcement of Olympics, new University campus, etc.

Like in any other business you can make a profit but you need to know what you are doing.
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August 24 2011
Consider ROI and not hoping for a comeback in the market anytime soon.  Also discuss it with your accountant for tax advantages, etc.  A rehab type home in a good area is usually worth the investment and pays a better rent factor too.  Buying rundown homes in marginal areas becomes a gamble, just like guessing which raw land might pay off in the future.
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August 24 2011
Vacant land will not provide you with cash flow!  Unless you have a lot of money to simply "park" into land, I suggest you invest in turnkey properties that provide you monthly cash flow and tax benefits.

We have clients that are "stuck" with land right now and wish they could liquidate it so they can invest in some of our turnkey investments.  :-(

Feel free to call me to discuss the pros and cons.

Good luck,

Marco Santarelli
Norada Real Estate Investments
.
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August 24 2011
There are many houses located in this area. Some are not as bad as you think. I can email you a list.
The lots may be more of a long term flip type of goal. The houses would get you short term rental income and long term flip potential. 
The lots would also be a gamble , because you would have to make sure you've pin pointed a GOOD location. Unless you want to build your own subdivisions. Commercial lots may have more potential, because the spectrum is broader and the return could be greater.
These are just my thoughts, contact me for the list.
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August 24 2011
 
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